Category: Trading

What Is Black-Scholes Model: Meaning, Formula & Benefits

Have you ever wondered how the correct price of an option is determined? In the world of trading, the Black-Scholes Model has provided a mathematical solution to this question. It is a mathematical model that helps in finding the correct value of a European option. Today, this model is used by traders, investment banks and fund managers around the world.

In this blog, we will understand in simple language what is Black-Scholes model, its formula, assumptions, strengths and limitations of Black-Scholes option pricing model.

What Is Black-Scholes Model?

The Black-Scholes Model is a mathematical method for calculating the theoretical price of a European option. It was developed in 1973 by Fischer Black and Myron Scholes, with later contributions from Robert Merton. For the first time, the model gave traders a scientific way to calculate what the “fair value” of an option should be.

The Black-Scholes option pricing model is still one of the most widely used models in the world, especially for pricing stock options and other derivative instruments. It is used by major investment banks, trading firms and portfolio managers to make the right decisions at the right time. The model focuses on :

1. Current Price

This is the actual market price of the underlying asset at the time when you are calculating the value of the option. As the price moves up or down, the option price is also directly affected.

2. Strike Price

The strike price is the price at which the option holder can buy or sell the stock in the future. For a call option, if the stock price is higher than the strike price, the option becomes more valuable. For a put option, the opposite is true—the higher the strike price, the higher the value.

3. Time to Expiry

This tells how much time is left till the maturity of the option (in years). The more time is left, the higher is the value of the option because the scope of favorable price movement is larger.

4. Volatility

Volatility means the possibility of fluctuations in the stock price.

Higher volatility means more uncertainty and therefore the option may be more expensive because its potential payoff is higher.In the Black-Scholes model, volatility is assumed to be constant.

5. Risk-Free Interest Rate

This is the interest rate that an investor can get without any risk (such as government bonds). This shows how much the future payout of the option should be discounted in today’s terms. Higher rates mean the value of the option may be affected.

Using all these factors, the Black-Scholes model determines what the fair price of an option should be. Now in the further sections we will understand its formula and real-life examples in detail.

The Black-Scholes Formula

The Black-Scholes model is used to calculate the theoretical price of European style call and put options. The formulas for both are different but the base variables remain the same.

Black-Scholes Formula:

Option Type	Formula
Call Option (C)	C = SN(d1) − Xe^(−rt)*N(d2)
Put Option (P)	P = Xe^(−rt)N(−d2) − S*N(−d1)

Variables and their meaning (applicable to both Call and Put):

Symbol	Represents	Simple Explanation
S	Current Stock Price	The market price of the stock at the time of option pricing
X	Strike Price	The predetermined price at which the option can be exercised in the future
r	Risk-Free Interest Rate	The return on a risk-free investment
t	Time to Expiry (in years)	The time remaining until the option’s expiration
σ	Volatility	The expected fluctuation or variability in the stock price
N(d1),N(d2)	Standard Normal Distribution	The probability values derived from the standard normal distribution curve
d1	Intermediate Calculation	[ ln(S / X) + (r + σ² / 2) × t ] / (σ × √t)
d2	Intermediate Calculation	d1 – σ × √t

Example: Call Option Price Using Black-Scholes

Parameter	Value
Nifty Spot Price (S)	25100
Strike Price (X)	25000
Time to Expiry (T)	15 days = 15/365 = 0.041
Risk-free rate (r)	6.9% = 0.069
Volatility (σ)	13% = 0.13

Step 1: d1

d1 = [ ln(S/X) + (r + σ²/2) × T ] / (σ × √T)

= [ ln(25100 / 25000) + (0.069 + 0.13² / 2) × 0.0411 ] / (0.13 × √0.0411)

= [ 0.00399 + (0.069 + 0.00845) × 0.0411 ] / (0.13 × 0.2027)

= [ 0.00399 + 0.00317 ] / 0.02635

= 0.00716 / 0.02635 = 0.272

Step 2: Calculate d2

d2 = d1 – σ × √T

= 0.272 – 0.13 × 0.2027

= 0.272 – 0.02635 = 0.2457

Step 3: Find N(d1) and N(d2)

N(d1) = 0.6069

N(d2) = 0.5969

Step 4: Calculate Call Option Price

Call = S × N(d1) – X × e^(-rT) × N(d2)

= 25100 × 0.6069 – 25000 × e^(-0.069 × 0.0411) × 0.5969

= 15245.2 – 25000 × 0.9972 × 0.5969

= 15245.2 – 14918.4 = ₹326.8

Final Answer : Call Option Premium (Strike ₹25000) = ₹326.8

Benefits of the Black-Scholes Model

The benefits of Black-Scholes Model are given below:

Fast and standard way to know Option Price : The Black-Scholes model gives a formula that allows you to calculate the price of options quickly and in a standard way. This helps traders to take fast decisions.
Accepted Model in Global Financial Industry : This model is accepted and used by banks, institutions and analysts around the world. Its credibility is quite strong, which makes it easy for practical use.
Makes it easy to compare different options : With the help of Black-Scholes, you can compare options of different stocks and expiry dates. This shows which option is more valuable.
Foundation of Advance Financial Models : This model is the base of many advanced models like Binomial tree, Monte Carlo simulation. Meaning, this is a foundational concept that is important to understand.
Helps in catching market inefficiencies : When the actual market price of an option is higher or lower than the theoretical price, this model can tell if there is some mispricing happening in the market.

Strengths and Limitations of the Black-Scholes Model

Strengths

Precise and Quick Pricing : This model helps calculate the theoretical value of the option quickly and accurately, which is very useful for real-time trading decisions.
Globally Accepted Standard : Black-Scholes is the most widely used option pricing model worldwide. Institutions, hedge funds, and traders use it as a benchmark.
Mathematical Simplicity : Its formula may seem complex, but when the variables are right, its calculation is simple and repeatable. It can be easily implemented with Excel or programming tools.

Limitations

Constant Volatility Assumption : Black-Scholes assumes that the volatility of the stock remains constant, whereas in the real world volatility keeps changing over time. This is a big limitation.
Only for European Options : This model applies only to European options that can be exercised only at expiry.
No Transaction Costs : The model assumes that there is no brokerage or transaction cost. But in real trading there are charges that affect the option price.
Ignore Sudden Events : This model does not consider events like unexpected news, market crashes or earnings announcements, which can change the volatility of the asset significantly and cause a difference between the actual price and the model price of the option.

Conclusion

The Black-Scholes Model remains one of the most reliable frameworks for determining the theoretical value of options. While it is based on certain ideal assumptions, it continues to be highly relevant in real-world trading and risk management. For anyone looking to deepen their understanding of options and learn how fair valuation is determined, the Black-Scholes Model offers a strong foundation. With the right data and tools, its application is straightforward and can serve as a valuable guide for traders, investors, and financial professionals alike.

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5	Difference Between Forward and Future Contracts Explained
6	Cost of Carry in Futures Contract
7	Silver Futures Trading – Meaning, Benefits and Risks

Frequently Asked Questions (FAQs)

What is the Black-Scholes Model used for?
This model is used to calculate the theoretical price of options.
Is the Black-Scholes Model still relevant today?
Yes, this model is still used a lot today, especially for valuing European options.
Can I use the Black-Scholes formula to calculate option prices manually?
Yes, but the calculations are a bit complex, it is easier to calculate using a spreadsheet or calculator.
What are the key inputs in Black-Scholes Model?
Spot price, strike price, time to expiry, risk-free rate and volatility – these are the main inputs.
Is the model accurate in all market conditions?
No, its accuracy may decrease in highly volatile market conditions.

August 22, 2025

Pledging Shares vs Pay Later (MTF): Key Differences

Nowadays, many retail investors resort to margin trading so that they can buy more shares even with less capital. But there are two main ways to get this facility one is availing margin by Pledging Shares, and the other is Pay Later (MTF), where the brokerage firm lends you money. Both options work differently and choosing the wrong option can also lead to losses.

In this blog, we will understand in simple language what is the difference between Pledge Shares vs Pay Later, which option can be better for you, and what things should be kept in mind.

What is a Margin Trading Facility (MTF)?

Margin Trading Facility (MTF) is a facility that gives investors the advantage to buy more shares with less capital. In this system, instead of paying the entire amount at once, you invest a certain percentage of the amount yourself and your broker lends the rest of the amount. In return, the broker charges interest from you.

Example : Suppose you want to buy shares worth ₹1 lakh but you have only ₹25,000. If your broker gives 75% margin, then you can buy shares worth ₹1 lakh even by paying ₹25,000. The broker will give the remaining ₹75,000 and you will have to pay interest on it daily.

Pros of Margin Trading Facility

Facility to do big trades with less capital : Through MTF, you can buy shares of large amounts even by investing less money. This gives you the opportunity to catch big opportunities in the market, especially when you do not have the full amount.
Margin facility without needing an existing portfolio: With MTF, you can avail funds from the broker even if you don’t already hold shares. This allows you to trade and capture opportunities in the market without depending on your existing investments.
Regulated and secure system by SEBI : MTF runs completely as per the rules of SEBI. Under this, the process of pledging is done through NSDL/CDSL, which maintains transparency and security.

Cons of MTF

Interest cost can be high : In MTF, interest is calculated daily on the amount taken from the broker. With most brokers, this interest can be as high as 12% to 18% per annum, which significantly increases your cost in the long run.
Big loss due to high leverage : If the trade goes against you, then due to leverage the loss can also be equally high. Therefore, using MTF without risk management can be dangerous.
Forced selling of shares when the market falls : If the value of the pledged shares falls and the margin in your account reduces, then the broker can force selling. This puts the decision to exit the trade out of your control.

What is Pledging of Shares?

Pledging of Shares is a facility in which you can get margin for trading from the broker by pledging your existing shares. This saves you from having to invest extra money and you can make new trades using your existing portfolio. This is especially beneficial for those investors who want to hold long term investments but also want to trade in the short term.

How does Pledging of Shares work?

When shares are pledged, the broker applies a haircut to their value. This means that the collateral value of your pledged shares is reduced by a certain percentage. The haircut varies depending on the market value, volatility, and overall risk profile of the share. Higher-risk or more volatile shares usually attract a higher haircut, which reduces the effective margin you receive.

Example : If you pledge shares worth ₹1,00,000 and the haircut is 25%, then you will get a margin of ₹75,000. You can use this margin in share trading, option selling or other segments.

Pledging of Shares Process: OTP facility from CDSL/NSDL

Pledging of Shares is completely digital and SEBI-regulated. You have to give OTP-based approval through CDSL or NSDL. For every pledge, you get a link via SMS/E-mail, through which you approve the pledge.

Which stocks can be pledged?

Not every stock is eligible for pledge. Pledge is allowed only on stocks approved by SEBI and included in the broker’s approved securities list, usually bluechip and high-liquidity stocks.

Pros of Pledging of Shares

No need to invest extra cash : You can trade by pledging the shares you already have; this eliminates the need to invest new capital.
Trading without selling long-term holdings : If you want to hold your stocks for the long term, you can still pledge them and trade in the short term. This gives both benefits.
SEBI regulated, secure process : The pledge system through NSDL/CDSL is transparent and secure. The broker cannot take any action without your permission.
Useful in option trading : Margin is required for option writing (selling) in this situation pledged stocks prove to be very useful as it reduces the capital requirement.

Cons of Pledging of Shares

Due to haircut, full margin is not available : Haircut is applicable on every share. On some stocks, a haircut can be 30% or more, due to which you get less margin.
Some stocks are not eligible for pledge : Not all shares can be pledged. If you have shares of small or illiquid companies, then you may not be able to take pledge margin from them.
Risk of Auto-Square Off in market fall : If the value of your pledged stocks suddenly falls and the loss in your position increases, then the broker can automatically square off your position (auto square-off). This can lead to losses.

Pledging of Shares vs Pay Later (MTF): Key Differences

Feature	Pledging of Shares	Pay Later (MTF)
Source of Funding	Margin from own holdings	Funds are received in the form of loan from the broker
Ownership of shares	Shares remain in your name	Shares are purchased in your name using borrowed funds
Interest Rate	Interest on margin is charged only if used overnight or for delivery trades	Daily interest applies (typically 12-18% annually)
Risk Level	Low to medium	Higher, especially in volatile markets
Ideal Use Case	Option trading, margin shortfall, hedging	Positional trading for higher returns
Margin Flexibility	Depends on haircut % and type of pledged stock	Depends on broker limits and transaction size
Regulation	SEBI-mandated CDSL/NSDL pledge system	Governed by SEBI’s MTF framework

Increase Buying Power with Pocketful MTF – Get 5x Margin!

Get up to 5x buying power with Pocketful’s Margin Trading Facility (MTF), and that too at the lowest interest rate, starting at just 5.99%. Simple process, fast execution and complete transparency all in one place.

Check Out – Stocks Available for MTF

When Should You Use Pledging of Shares?

Already held shares should be available : Investors who already have quality stocks and do not want to sell them can generate additional returns by trading using pledged shares.
Trading with Limited Capital : When there is an opportunity to trade in the market but cash is limited, Pledging of Shares is a better solution as it does not require investing new funds.
There should be a plan for option selling or hedge strategy : Pledging of Shares is most beneficial for option sellers, especially in hedged strategies (such as covered call or spread trades) where margin requirements are high.
Financing costs are low : The interest in Pledging of Shares is very low or sometimes even zero on intraday trading as compared to Pay Later MTF, making it a cost-efficient way of capital utilization.

When Should You Use Pay Later (MTF)?

When trading capital is low but conviction is high : If you have confidence in a stock or move but do not have required funds, then with MTF you can create a trading position without missing that opportunity.
Suitable for short-term or swing trading: The Pay Later facility is designed for traders looking to capture price movements typically within 3 to 15 days. By providing leverage, MTF enhances the potential for higher returns over this short holding period.
Immediate entry is needed in a high momentum market : When the market is moving fast and delaying entry can be harmful, then MTF offers an instant funding option.
Capital efficiency needs to be improved : With the Pay Later feature, you can take a much larger trading position with less capital, which can help in using the available funds in a smarter way.
Interest cost seems manageable : If you are planning to square off the trade quickly and the impact of interest is minimal, then MTF can prove to be cost-effective.

Use our Margin Trading Facility Calculator

Conclusion

Pledging Shares and Pay Later (MTF) are powerful tools that offer flexibility and capital efficiency to modern traders. However, choosing the right option depends on how you trade and whether you have some shares that you wish to hold for the long term or not. Pay Later (MTF) works best for short term trading opportunities, while Pledging Shares can be a smarter way to unlock the value of your long term holdings. Your decision should align with your trading style, risk appetite and investment horizon. Always keep in mind that leverage is a double edged sword. It can amplify gains but without the right strategy it can also magnify losses. Hence, it is advised to consult a financial advisor before using either of these features.

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Frequently Asked Questions (FAQs)

What is the meaning of MTF in trading?
MTF means Margin Trading Facility, through which you can buy more quantities of shares for less money.
Can I pledge any stock for margin?
No, only stocks from the broker’s approved list can be pledged, usually liquid and blue-chip stocks.
Is interest charged in MTF?
Yes, MTF charges interest daily as per the MTF rates specified by the broker until you close the position.
What happens if the price of the stock bought using MTF falls?
If the stock price falls and the stock is bought using MTF, the broker may send you a margin call or square-off your position.
Which is safer: MTF or Pledge Shares?
Safety depends on your strategy. Pledging shares reduces risk for long-term investors, while MTF offers the option of high risk but quick returns.

August 21, 2025

What is Spot Trading and How Do You Profit?

When you visit the market to buy something, the process is simple. You ask the price, the seller quotes an amount, you pay and walk away with your purchase. The transaction is direct and instant. You pay on the spot and receive the goods on the spot. Simple, right?

This straightforward process mirrors the core idea of spot trading in financial markets. It’s really that straightforward. The name itself comes from making a deal “on the spot”. Imagine, if you could buy and sell tiny pieces of huge companies like Reliance or TCS, or even foreign currency, with the same simplicity? That’s exactly what spot trading is in the financial world.

What is Spot Trading?

It is the simple act of buying or selling something like stocks, currencies (forex), or even gold for immediate payment and delivery. Because you’re dealing with cash for an asset right now, it’s often called the “cash market” or “physical market”.

The price you pay is the “spot price,” which is the live market price for that asset at that very second. No single person decides this price, it’s determined by the tug of war between buyers and sellers.

While your trade happens in a click, the official background work of moving the shares into your account takes a little time. For stocks in India, this is called settlement, and it happens in T+1 (the trade day plus one more working day). As a trader, you won’t really feel this delay, you’ll see the shares in your account quickly.

The appeal of spot trading lies in its simplicity. However, while it is easy to begin, consistently making a profit is far more challenging. Achieving success requires not only knowledge but also a well-defined trading strategy and the discipline to remain calm under pressure.

How Do You Actually Make Money?

The golden rule of profiting from spot markets trading is simple: “Buy Low, Sell High”. Let’s follow a short story to understand it thoroughly.

Suppose an investor has been tracking a company, let us call it Company A, and believes in its growth potential. The live spot price of its share is ₹500. The investor decides to buy 10 shares, spending a total of ₹5,000.

A month later, Company A reports excellent results. Increased demand pushes the share price to ₹550. The investor chooses this moment to sell the 10 shares, receiving ₹5,500. The profit is straightforward: ₹5,500 (sale value) minus ₹5,000 (purchase cost), resulting in a net gain of ₹500.

This isn’t just for stocks. Let’s say you’re planning a trip to the US. Currently 1 USD is worth ₹83 and you think the dollar will get stronger. You could do an foreign exchange spot trade now to buy some dollars. If the rate climbs to ₹85 later, you’ve effectively locked in a better rate and saved money. Traders do this on a massive scale to profit from these movements.

Advantages of Spot Trading

Spot trading offers several benefits that make it one of the most accessible and straightforward ways to participate in financial markets.

Easy to Understand : It’s as simple as shopping: you buy it, you own it. No expiry dates or leverage to worry about.
You Genuinely Own It : When you buy a share, you become a small owner of that company. This isn’t just a paper contract, it’s real ownership, which gives a great sense of ownership.

No Additional Risks : The most you can lose is the money you put in. If you invest ₹5,000, that’s your maximum risk. In other types of trading that use borrowed money, losses can be much, much bigger. Spot trading keeps you safe from that.

Fair Price : The spot price you see is the same for everyone. It is set by the market’s real time supply and demand, making it a level playing field for all.

Disadvantages of Spot Trading

Despite its simplicity, spot trading also comes with certain limitations and risks that investors should carefully consider.

Market Risks : Simplicity doesn’t eliminate risk. If you buy a stock for ₹100 and it drops to ₹80, you’ve lost money. Markets can be volatile and unpredictable.

Capital Requirement : To buy shares worth ₹10,000, you must have ₹10,000 in your account. This can limit how much you can trade and, therefore, how much profit you can make.

Uncertainty : Since you’re using your own money, your profits are tied to how much you invest and how much the price moves. Building wealth this way requires capital and, most importantly, time and patience.

Highly Market Dependent : For a beginner, the main strategy is to buy low and sell high. This means you’re generally waiting for prices to rise, which limits your opportunities when the market is down.

How to Start Spot Trading : First Steps

You can begin doing spot trading by following the steps below:

Step 1

You’ll need two key documents that are essential for almost any financial activity in India: your PAN Card and your Aadhaar Card, along with other KYC documents.

Step 2

You need a registered stock broker. Popular online brokers in India include Pocketful, Upstox, and Zerodha. You’ll open two accounts with them, which is usually done through simple online process:

A Trading Account: Used to place your buy and sell orders.
A Demat Account: Acts like a digital locker where your shares are safely kept.

Step 3

Once your account is open, you’ll need to add money from your bank account. You can do this easily with UPI or Netbanking. Start with a small amount of money.

Step 4

This is the most important step, before buying any share, it is essential that you do your research properly. Understand the company’s business model you’re looking to invest in and never buy a stock just because someone gave you his views about it.

Step 5

Once you’ve done your research and made a decision, log in to your broker’s app. Search for the stock, check its live spot price, decide how many shares you want, and hit ‘Buy’. That’s it! You’ve just made your first spot trade.

Factors to consider before starting spot trading

Knowing what not to do is just as crucial as knowing what to do. Here are some common mistakes to watch out for.

Emotional Trading: When investment positions begin to show losses, it is natural for investors to experience fear. Likewise, when a stock price rises sharply, feelings of greed can often influence judgment. However, making decisions driven by such emotions can be detrimental. The most successful traders remain composed and disciplined, adhering to their predefined strategy.

Market Rumours : Your friend, your cousin, or some expert on youtube tells you about a stock that’s definitely going to rise. The Fear Of Missing Out (FOMO) kicks in, and it’s powerful. Please, resist this urge, a hot tip without your own research is just a gamble.

Trading Without a Strategy: Before you buy anything, you need a plan. Why are you buying it? At what expected price will you sell for a profit? And crucially, at what price will you sell to cut your losses? Trading without a plan isn’t trading, it’s gambling.

Diversification : Never put all your trading money into one stock. Spreading your money across different investments is a smart way to reduce risk.

Ignoring Stop-Loss Orders: A stop-loss order acts as a safety net by automatically selling a stock once it falls to a predetermined level. Trading without one exposes you to avoidable losses and unnecessary risk.

Being Impatient: The market is not a get quickly rich scheme. Building wealth takes time, effort, and a whole lot of patience. Don’t let small losses discourage you.

Overtrading : Many beginners feel they need to trade constantly to make money. This is a myth. It just increases your trading costs and leads to burnout. Focus on making a few smart, well researched trades.

Conclusion

Spot trading is one of the most straightforward ways to participate in the financial markets, involving the direct purchase of assets at their current market price. Its simplicity makes it accessible to beginners, but it also carries inherent risks. Just as it offers opportunities for profit, it also presents the possibility of loss. Long-term success in spot trading comes not from shortcuts or quick gains but from consistent learning, discipline, and patience. It should be approached as a steady journey rather than a race, with an emphasis on informed decisions and prudent risk management. It is advised to consult a financial advisor before investing.

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Frequently Asked Questions (FAQs)

Is spot trading suitable for beginners?
Yes, spot trading is normally considered good for beginners because it is the simplest form of trading to understand. You buy an asset, you own it, and your risk is limited to the amount of money you invest.
What is the minimum amount to start spot trading in India?
There is no official minimum amount to start trading. You can begin with as little as the price of a single share. Since some shares cost less than ₹100, you can technically start with a very small amount to learn and gain experience.
Can I lose more money invested in spot trading?
In spot trading, you are not borrowing any money (this is known as “leverage”). Therefore, the absolute maximum loss you can face is the total amount of money you have invested.
Can I lose more money invested in spot trading?
In spot trading, you are not borrowing any money (this is known as “leverage”). Therefore, the absolute maximum loss you can face is the total amount of money you have invested.
What is the difference between spot trading and investing?
The main difference is the time frame and intention. Spot trading often involves holding assets for a shorter period (from a few days to several months) with the goal of profiting from price fluctuations. Investing is typically a long term strategy where you hold assets for years to build wealth over time.
Do I need to keep an eye on the market all day for spot trading?
Not necessarily. While very short-term traders (like day traders) do monitor the market constantly, many spot traders who hold positions for days or weeks may only check their trades once a day or even less. You can use tools like stop-loss orders to manage your risk automatically without having to watch the screen all the time.

August 21, 2025

What is Pay Later (MTF) & Steps to Avail Pay Later?

There are many occasions in the stock market when we want to invest in a good stock, but lack of funds comes in the way. At such times “Pay Later” feature or the Margin Trading Facility (MTF) emerges as a smart option. This facility gives you the power to buy shares of higher value with less capital.

In this blog, we will understand what margin trading facility or Pay Later feature is and what are the steps to avail it, so that you can use this facility easily and safely.

What is a Margin Trading Facility (MTF)?

Margin Trading Facility (MTF) or “Pay Later” is a facility that gives you the freedom to buy shares of higher value with less capital. In this, you invest a part of your capital and the rest of the amount is financed by your broker – that is, you trade now using borrowed funds and pay the rest later with applicable interest.

For example, if you have ₹20,000, you can buy shares worth up to ₹1,00,000 through MTF (with 5 times margin). Your broker gives you a loan of up to ₹80,000, on which interest is applicable.

In cash trading, you have to pay the full amount immediately, while in MTF trading, you can take delivery by paying a partial amount and pay the rest later. This facility is regulated by SEBI and applies only to stocks that are included in the MTF-approved list. This facility is offered by many popular brokers like Pocketful, Zerodha, Upstox, Angel One, etc.

Pocketful makes this facility even easier as you get MTF at the cheapest interest rate in the industry, starting at just 5.99% per annum, along with up to 5 times margin. This gives both new and professional traders a chance to make big investments without worrying about lack of funds. MTF is a great tool if you understand the risk and are adept at the nuances of trading. But using it without planning can also be detrimental, so take every step wisely.

Check Out – Stocks Available for MTF

How does Margin Trading Facility (MTF) work?

MTF works in the following ways:

Deposit initial margin amount : In MTF, you don’t have to invest the entire investment amount. You only pay a part, say 20% or 25% upfront, which is called the initial margin.
Broker provides the rest of the funds : The remaining amount is funded by the broker. Some platforms give you a margin of up to 5 times, allowing you to take large positions with limited capital.
Shares purchased are pledged : The stocks purchased using MTF funds are pledged to the broker. The shares remain pledged until you make the full payment.
Interest rate applies : You have to pay a fixed interest on the amount financed by the broker . This interest varies on different platforms. Some brokers like Pocketful offer this facility at very low rates as low as 5.99% per annum.
MTF is available only on Selected Stocks : Not every stock can be bought using the MTF feature. This facility is available only on those stocks which are approved by SEBI and the exchange.
Timely payment is important : If you do not pay interest or margin on time, your holdings can be forcibly sold; this is called a margin call or auto square-off.

How to Avail Pay Later Facility?

You can avail the Pay Later facility by following the steps mentioned below:

Step 1: Open a trading account with a broker that offers MTF or Pay Later Facility

First, you need to choose a broker platform that offers an MTF facility. Today, many brokers like Zerodha, Angel One, Upstox, ICICI Direct, Groww, and Pocketful offer this service.

Step 2: Activate MTF facility

After opening the account, you have to fill a consent form to activate MTF. This process can be easily completed from the mobile app or web portal of most brokers.

Step 3: Fund your margin account

To use MTF, you have to deposit an initial margin amount. This amount can vary from one broker to another and the stock selected (usually equal to 20%–25% of the trade value).

Step 4: Select from MTF-approved stocks

Not every stock is eligible for MTF. You must trade only in stocks that are approved for MTF by SEBI and the broker. This list is available on your broker platform.

Step 5: Place an order by choosing “Margin” or “Pay Later” option

When you go to buy a stock, select “Margin” or “Pay Later” in the order type. This will activate funding by the broker for your trade and your amount will be automatically adjusted in the margin.

Step 6: Keep regular track of positions and interest

In MTF, you have to pay interest every day, so keep checking your portfolio, outstanding amount and margin status from time to time. If you do not make the payment on time, the broker can force the sale of stocks.

Key Benefits of Using MTF

Some of the benefits of using MTF are given below:

More buying power with less capital : The biggest advantage of MTF is your buying power increases. You can buy shares using up to 5x leverage, allowing you to cash in on big opportunities without delay.
Beneficial for short-term traders : If you do swing trading or short-term positional trading, then MTF is a useful tool for you. When there is a possibility of a sharp movement in a stock in the market and you have less funds, then this facility can be very useful.
Flexible repayment facility : You do not have to pay MTF charges every day. Many brokers give a time period of 30 to 90 days, so that you can comfortably hold the stocks and exit at the right time.
Facility to do new trade without selling other holdings : Suppose your funds are invested in some other stock but you want to do a new trade. In such a situation, MTF helps you, because you can do a new deal without selling your old holding.

Use our Margin Trading Facility Calculator

Risks & Charges Involved

Some of the risks and charges associated with using MTF or Pay Later facility are given below:

Interest has to be paid daily : In MTF, the broker lends you funds and the interest is charged daily. This rate may vary for different brokers.
Margin maintenance is a must : You are required to maintain a minimum margin in your account to keep your trade position active. If your margin falls below this level, you must replenish it immediately, or your broker may liquidate your position partially or fully to cover the shortfall, potentially locking in losses.
Risk of forced liquidation on margin shortfall : If you do not replenish the required margin, the broker can sell your holdings without your permission. This is called forced liquidation and can cause you huge losses.
Additional charges and penalties may also be levied : In MTF, apart from interest, there are other charges – such as pledge/unpledge fees, penalty if payment is not made on time, and sometimes account maintenance charges as well.
Every broker has a different charge structure : Interest and other charges vary by broker; some may have higher or hidden fees. Therefore, before availing MTF facility of any broker, read MTF policies.

Factors to Consider Before Using MTF

Key factors to consider before using MTF or Pay Later feature is given below:

Understand the interest rate and potential returns : In MTF, you have to pay interest on the borrowed funds. If the profit from your trade is less than this interest, then there may be a loss. Therefore, before investing, estimate whether your expected return is able to exceed this interest or not.
Check approved stocks and leverage ratio : Every broker has a list of stocks on which MTF facility is available. Along with this, the amount of leverage you will get like 3x, 5x can also vary. So, check these terms before trading.
Assess your risk-taking ability : MTF is a high-risk facility, which is greatly affected by market fluctuations. If you are new or do not understand market movements properly, then it can be harmful for you. First ask yourself – are you ready to take such risks?
Actively monitor trades : Margin calls are a possibility in MTFs. If the market moves against you and you don’t pay attention, your holdings can be sold automatically. So it is very important to keep a constant eye on the trades.

Conclusion

Margin Trading Facility (MTF) is a powerful tool that allows investors to take larger positions with relatively less capital. However, it proves beneficial only when one has a clear understanding of its terms, risks, and associated costs. With competitive interest rates and improved platforms such as Pocketful, MTF has become more accessible and affordable. For investors who practice strong risk management and actively monitor their trades, MTF can serve as an effective means to enhance portfolio growth. It is advised to consult a financial advisor before investing or trading using MTF or Pay Later facility.

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4	What is Intraday Margin Trading?
5	What is Operating Profit Margin?
6	What is Stock Margin?
7	Key Differences Between MTF and Loan Against Shares
8	What is Margin Funding?

Frequently Asked Questions (FAQs)

What is margin trading in simple terms?
Margin trading means trading higher value by borrowing money from broker.
Is there any interest charged on MTF?
Yes, interest is charged on MTF on a daily or monthly basis.
What are the steps for a margin trading facility (MTF)?
Open an account, activate MTF, select approved stocks, deposit margin amount and start trading.
Is margin trading safe for beginners?
It can be a bit risky for new investors until they understand market movements and risk management.
Can I hold MTF stocks for the long term?
Shares bought using MTF funds can be held only for a specified time period, which depends on the MTF policies of your broker.

August 19, 2025

10 Best Books for Stock Market Technical Analysis

Success in trading is not just luck; it comes with the right knowledge, which can be obtained from a good technical analysis book. In today’s era where the market makes new moves every day, it has become necessary for every trader to build a strong technical base. No matter how much YouTube and short courses teach, in-depth understanding is only gained from reading the best books for technical analysis.

In this article, we will talk about those technical analysis books which are considered to be the most effective in 2025 whether you are a beginner or a professional, these books can completely change your trading game.

10 Best Technical Analysis Books for Stock Market in 2025

Book Name	Author	Who Should Read It?	Key Highlights
Technical Analysis of the Financial Markets	John J. Murphy	Traders looking to build a strong technical foundation	Most comprehensive guide on indicators, trends, and chart patterns
Japanese Candlestick Charting Techniques	Steve Nison	Traders who want to master candlestick patterns	Original source of candlestick strategies with practical examples
Trading in the Zone	Mark Douglas	Traders who frequently make emotional or impulsive decisions	Deep dive into trading psychology and discipline
Technical Analysis Using Multiple Timeframes	Brian Shannon	Intraday and swing traders	Teaches how to analyze price action across multiple timeframes
The New Trading for a Living	Dr. Alexander Elder	Traders looking for a full system (entry, mindset, risk)	Combines Triple Screen system, risk management, and planning
Encyclopedia of Chart Patterns	Thomas Bulkowski	Pattern-focused traders and researchers	Over 65 chart patterns analyzed with real market data
Charting and Technical Analysis	Fred McAllen	New traders starting their technical journey	Basic concepts explained in simple, easy-to-understand language
Come Into My Trading Room	Dr. Alexander Elder	Traders aiming to approach trading professionally	Step-by-step guide on analysis, execution, and self-review
How to Make Money in Stocks (CAN SLIM)	William O’Neil	Traders who want to combine fundamentals and technicals	CAN SLIM strategy blending chart patterns with earnings, volume
The Art and Science of Technical Analysis	Adam Grimes	Traders interested in professional or quantitative analysis	Strong focus on data, stats, and realistic trading psychology

Brief Overview of the 10 Best Technical Analysis Books

A summary of the 10 best Technical Analysis Books has been given below:

1. Technical Analysis of the Financial Markets

This book is considered the most reliable guide in the world of technical analysis, often called the “Bible” of trading. John J. Murphy, a former CNBC technical analyst, has explained chart patterns, trend lines, indicators and market behavior in detail. The book is about 500 pages long and provides theory as well as a practical approach. Whether you do day trading or swing trading, it is useful for every trader. Information on computer-based charting tools and the latest technologies has also been added to it as of 2025. If you are looking for a technical analysis book that teaches everything from beginner to advanced, then this book is an excellent choice.

2. Japanese Candlestick Charting Techniques

If you want an in-depth understanding of candlestick patterns, then this book is best suited for you. Steve Nison is credited with popularizing candlestick charts in the western world. In this book, many popular patterns like Doji, Hammer, Engulfing are explained with explanation. Charts and real trading examples make it extremely practical. This book not only teaches individual patterns, but also explains how they can be combined with other indicators to create strong signals. Even in 2025, candlestick analysis is considered the most reliable for intraday and swing trading, and this book gives a strong foundation for the same.

3. Trading in the Zone

This book focuses on trading psychology rather than technical analysis, but is just as important. Mark Douglas explains that the biggest part of successful trading is your mental state, not strategy. Traders often make mistakes like fear of loss, overtrading or haste—this book teaches them to control them. Written in simple language, this book can completely change your way of thinking. In 2025, when markets are volatile, this book has become an essential guide to maintaining trading discipline.

4. Technical Analysis Using Multiple Timeframes

This book by Brian Shannon is especially for those traders who want to understand price action on different timeframes. It explains how to read the same stock or index in different ways on 15 minute, 1 hour and daily charts. This technique gives the trader better entry and exit points. The focus of the book is on price structure, trend analysis and volume. In 2025, when traders do multi-timeframe analysis on mobile or web charts, this book is a very practical and up-to-date guide.

5. The New Trading for a Living

This book by Dr. Elder teaches a complete trading system including analysis, entry, exit, money management, and psychology. It also includes his famous Triple Screen Trading System, which is still as relevant today. This book is especially for those who want to take trading seriously and work on the whole process, not just signals. It includes information on charts, indicators (such as MACD, EMA), and journaling. If you want to learn from a professional approach, then this can be considered the best book for trading discipline in 2025.

6. Encyclopedia of Chart Patterns

If you want to go deep into chart patterns, then this book is like a reference book for you. Thomas Bulkowski has statistically analyzed more than 65 chart patterns in it such as Head & Shoulders, Flags, Wedges, etc. Each pattern is accompanied by its success rate, failure chance, and performance data. This book is for those traders who want to make their analysis data-based. In 2025, where backtesting and quant-based analysis are growing rapidly, this book gives you a strong technical edge.

7. Charting and Technical Analysis

This book is for those who are just starting technical analysis and want to understand in simple language. Fred McAllen has explained chart patterns, support-resistance and basic indicators in a very easy way. The book is characterized by its simplicity, no heavy theory, just the essentials and their practical explanation. If you are learning technical analysis for the first time, and do not want the book to be cumbersome, then this is a great beginner’s guide. Even in 2025, this book is considered to be the easiest technical analysis book for beginners.

8. Come Into My Trading Room

This second book by Dr. Elder goes a step further than his first book. It not only provides technical analysis, but also a complete plan of how to take trading as a profession. The book gives guidelines like maintaining a diary, reviewing each trade, and identifying your mental tendencies. This book teaches to create a structured routine so that you can make trading a serious and regular process. In 2025, when shortcuts are causing more losses, this book gives ideas about long-term trading success.

9. How to Make Money in Stocks (CAN SLIM)

This book by William O’Neil is a combination of technical and fundamental, which is based on a strategy called CAN SLIM. It explains how to select stocks by combining earnings, market trends, and chart breakouts. This book is especially for those who want to do swing or positional trading and do not want to depend only on indicators. Many successful traders in India also follow this model. In 2025, when data-driven analysis is in trend, this book is considered to be an excellent trading analysis book.

10. The Art and Science of Technical Analysis

This book is for those traders who want to understand technical analysis from a professional and data-based perspective. Adam Grimes has explained emotional bias, probability, and chart patterns in a scientific way. This book is not for beginners but for those who want to go deeper into the market and learn logical decision-making. This book teaches you that technical analysis is not just drawing lines but a way of thinking. In the advanced trading environment of 2025, this book is extremely useful for long-term success.

Why Read Technical Analysis Books in 2025?

In today’s fast-paced trading world, information is everywhere, but deep and structured learning is rare. Technical analysis books provide a comprehensive, step-by-step approach that short videos and free PDFs often cannot offer.

YouTube and free PDFs cannot teach everything : Nowadays short videos and free content are available everywhere, but their biggest drawback is – lack of in-depth and systematic learning. Trading is not a game, it is a professional skill, which cannot be learned only with superficial knowledge.
Structured Learning : A good technical analysis book explains every concept to you in detail and in a correct order. This not only strengthens your foundation, but also develops logical thinking and discipline.
Reliable Information : When indicators deceive or the mind gets confused, then these books work as a reference guide for you like a trusted companion.
Complete knowledge in one place : Chart patterns, indicators, psychology, money management, strategies in-depth information on all these topics is available in one place, which is priceless for any serious trader.
These books are still relevant in 2025 : Even in today’s trading environment with AI and automated tools, books help in making decisions based on solid thinking and logic which is more important than any software.

Benefits of reading Technical Analysis Books

Various benefits of reading technical analysis books are given below:

Builds a strong base : When you start trading, charts, indicators and patterns seem quite complicated. A good technical analysis book helps you explain all these basic tools slowly and in easy language.
Beneficial in the long term : The better the knowledge, the lesser the risk. By reading the best book for stock market technical analysis, you learn to control losses in trading and maximize profits.
Ability to do your own analysis : Books do not let you depend on others. You can read the charts yourself and take your trading decisions yourself without tips.

How to choose the right Technical Analysis book?

Choosing the right book ensures that your learning is efficient and practical. You can follow the steps below to pick a book that truly matches your level and goals:

Identify your needs and level : If you are a beginner, choose a book that explains basic concepts and charts. If you are at the intermediate or pro level, a book with advanced strategies or indicators will be more helpful.
Check the author’s experience and background : It is better if the author whose book you are reading is a trader or market analyst himself. An author with real market experience talks about more practical and useful things.
Read reviews and ratings : The value of the book can be estimated by looking at the reviews of genuine readers on platforms like Amazon or Goodreads.
Updated and relevant content : The market is changing, so your book should also be updated. Choose a book with tools and strategies that are useful in today’s market rather than old theories.
Check the language and level of understanding : The language should be easy, especially if you like to read in Hindi. A book that explains complicated terms in an easy way is more effective.

Read Also: 10 Best Price Action Trading Books

Conclusion

For successful trading in the stock market, just knowing the indicators is not enough, the right mindset and strategy are equally important. This mindset is what you get from a good technical analysis book. The books mentioned above not only teach tools and chart patterns, but also help you understand how the market participants think. If you are really looking for the best book for trading, then choose a book according to your needs and experience and read it completely. Remember, every decision in the market is important and a good book can help you make better decisions at every step.

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6	10 Best Algorithmic Trading Books
7	10 Best Personal Finance Books to Read
8	Stock Market Books in Hindi

Frequently Asked Questions (FAQs)

What is the best technical analysis book for beginners?
Technical Analysis of the Financial Markets” by John J. Murphy is considered to be an excellent book for beginners.
Can I learn trading only by reading books?
Books give a good understanding, but practical experience and being active in the market is equally important.
Are these books useful for intraday traders?
Yes, most books provide information about indicators and charts which are very helpful in intraday trading.
Are technical analysis books expensive?
Some international titles can be costly, but there are also budget-friendly options available, including online editions and PDF versions.
Do these books include Indian stock market examples?
Most of the books are international, but their concepts are also applicable in the Indian market. Books by some Indian authors are also available.

August 19, 2025

What are OTM Call Options?

There are times in the stock market when we expect a stock’s price to rise but don’t want to risk a large amount of capital. In such cases, OTM (Out of the Money) call options can be a cost-effective and limited risk strategy. These are call options with a strike price higher than the current market price, meaning they involve relatively small upfront costs but offer the potential for significant returns.

In this blog, we will explain in simple language what OTM calls are, how they work and when it is appropriate to use them.

What is an Option?

An option is a type of derivative contract that gives you the right but not the obligation to buy or sell a stock or index at a fixed price called the strike price on or before a specific date. Options are widely used for trading, hedging, and speculation.

Key Terms You Must Know

1. Call Option : It gives you the right to buy a stock at a fixed price. It is bought when you think the price of the stock will rise.

2. Put Option : It gives you the right to sell the stock at a fixed price. It is used when you expect the price to fall.

3. Strike Price : This is the price at which you can buy or sell the stock.

4. Premium : The amount you pay to buy the option is called premium. This is the upfront cost.

5. Expiry Date : This is the last date till which the option is valid. After this date the option expires.

What are OTM Options?

OTM (Out of the Money) options are those that have no intrinsic value based on the current market price. In other words, if the option were to expire today, it would be worth nothing because the strike price is not favorable for immediate exercise.

OTM options are cheaper in premium, as their probability of turning profitable is comparatively less. But this is what makes them attractive for low-cost and high-risk speculative strategies.

OTM options are mainly of two types:

OTM Call Option
OTM Put Option

What are OTM Call Options?

A call option is a derivative contract that gives a person the right to buy a stock or index at a specified strike price in the future. When we talk about OTM call options, it means that the strike price of the option is above the current market price of the underlying asset.

For example, if Nifty is currently trading at 25,000 and you buy a call option at 25,300, it is an OTM call option. OTM options have a lower premium because they are less likely to be profitable at expiry. But this low cost makes them attractive for speculative trades.

How Do OTM Call Options Work?

Low premium, high potential returns : OTM call options are generally cheaper because they currently have no intrinsic value. They have value at expiry only when the price of the underlying asset rises significantly above the strike price. This lower cost of entry makes them attractive, but the probability of profit is smaller, which also makes them a higher-risk choice.
The premium is your entire risk : When you buy an OTM call, you pay only the premium – and this is your maximum loss limit. If the stock price does not reach the strike price by expiry, you lose only the premium, not more than that.
Time Decay causes a decline in value : The effect of time decay (theta) on the value of OTM options is faster. As the expiry approaches, if the price does not move, the value of these options starts falling rapidly.
Breakeven Point is Strike Price + Premium : You make profit from OTM calls when the stock price goes above (strike price + premium). For example: If you bought a call option with a strike price of ₹220 and paid a premium of ₹10, then your breakeven will be ₹230 at expiry.

Real-World Example: Trading an OTM Call Option

Suppose share ABC is currently trading at ₹1,000. You think that the stock may rise in the coming days. Instead of buying the shares directly, you decide to take an OTM call option with less risk.

You buy a call option with a strike price of ₹1,050, with a premium of ₹10.
Contract size: Let’s assume 200 shares
Total cost = ₹10 × 200 = ₹2,000

Now suppose the price of ABC shares becomes ₹1,080 on the day of expiry.

Intrinsic Value = ₹1,080 – ₹1,050 = ₹30
Net Profit per share = ₹30 – ₹10 = ₹20
Total Profit = ₹20 × 200 = ₹4,000

In this way, OTM call options can be a good choice for traders who want to capture a big move with less money, but correct estimation and timing is very important in this.

Risks and Limitations of OTM Calls

Trading in OTM calls can be risky due to the following reasons:

Usually OTM options become worthless on expiry : OTM call options do not have intrinsic value, and if the price does not go above the strike price by expiry, then this option becomes worthless.
Rapid effect of Time Decay : OTM options values are based only on time value. As the expiry approaches, the premium decreases rapidly, due to which the value can almost vanish.
A big price move is necessary for profit : Profit will be made only when the price of the underlying asset goes above the strike price + premium. This big move is not possible every time.
Buying more quantity can be dangerous : Because of the low premium, new traders often buy a large quantity of OTM options, which greatly increases their risk. In a sideways market, the entire investment can be lost.

Key Metrics to Watch Before Buying OTM Calls

Some of the key metrics to look at before buying OTM calls are listed below:

Implied Volatility (IV) : IV shows how much volatility is expected in the market. When IV is high, the premium of OTM call options becomes expensive. Buying OTM calls at high IV can make it even more difficult for you to reach the breakeven point.
Delta : The delta of OTM call options is very low (between 0.1 and 0.3), that is, the effect of changes in the price of the underlying asset is reflected slowly on the premium. This makes it difficult to get quick profits.
Volume and Open Interest : In an option with low liquidity, both entry and exit can be difficult. Always choose options that have both good volume and open interest.
Time till Expiry : If the expiry is very close, time decay can rapidly reduce the premium. It is better to choose a slightly farther expiry, especially if you are expecting a directional move.

Conclusion

OTM call options offer the potential for large gains at a relatively low cost, but success depends on accurately estimating the time, direction, and volatility of the market. They are best suited for traders seeking high potential returns with limited upfront risk. However, using them without a clear strategy can be dangerous. Always analyze market data, price movements, and time to expiry before entering a trade. When used wisely, OTM calls can not only protect your capital but also deliver substantial profits at the right moment. However, it is essential to consult a financial advisor before trading in options.

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Frequently Asked Questions (FAQs)

What is an OTM call option?
An OTM call option is one whose strike price is above the market price of the asset.
Are OTM call options risky?
Yes, the risk is higher as there is a possibility of it becoming worthless by the time of expiry.
Why is the OTM call option cheaper than ITM?
Because there is less possibility of it becoming profitable at expiry, its premium is also less.
Can I make good profit with OTM calls?
If the market moves fast and in the right direction, then yes, the profits can be good.
Should beginners trade OTM call options?
Beginner traders should first analyse them and understand the risk before taking entry.

August 18, 2025

Difference Between ITM, OTM, ATM in Call and Put Options

In options trading, terms like ITM (In the Money), ATM (At the Money) and OTM (Out of the Money) are part of everyday conversation for any trader. But if you are new to options trading, it is very important to understand the meaning of these three terms and know the difference between them, because they determine the value and risk of an option.

In this blog, we will learn about what ITM,OTM, and ATM options are and most importantly, how their definition differs in the context of Call Options and Put Options.

What is a Call Option?

A call option is a derivative contract that grants the buyer the right, but not the obligation, to purchase a stock or other asset at a predetermined strike price on or before a specified expiration date. Traders usually buy call options when the price of a stock is expected to rise. In this case, if the stock’s market price rises above the strike price, the option becomes “in the money” and starts generating profits.

The value of a call option comprises of two things:

Intrinsic Value (if ITM)
Time Value (decreases over time)

What are ITM, ATM and OTM in Call Option?

When you buy or sell a Call Option, its value depends on the difference between its strike price and the current market price (spot price). Three terms are used to understand this difference: In the Money (ITM), At the Money (ATM), and Out of the Money (OTM). Let us understand these three terms in detail in the context of Call Option:

In The Money (ITM) – Call Option

When the strike price of a Call Option is less than the current price (spot price) of the stock, then that option is considered In the Money (ITM). In this case, the option has intrinsic value because exercising it immediately would allow the buyer to purchase the stock below its market price, resulting in a profit.

Example : If Reliance stock is trading at ₹1,500 and you have a Call Option of strike price ₹1,450, then the call is said to be ITM.

At The Money (ATM) – Call Option

When the strike price and the current price of the stock are almost equal, the option is said to be At the Money (ATM). In this situation, the option has little to no intrinsic value and consists primarily of time value, meaning its worth is derived mainly from the time remaining until expiration and the potential for favorable price movement.

Example: Reliance stock is at ₹1,500 and you hold a Call Option of ₹1,500, then it is an ATM call option.

Out of The Money (OTM) – Call Option

When the strike price is higher than the current price of the stock, the call option is said to be out of the money (OTM). In this case, the option has no intrinsic value, and its value is based only on its time value. If the stock price does not rise over strike price by expiry, the option will expire worthless.

Example : If Reliance is at ₹1,500 and you have taken a call option of ₹1,700, then it is OTM.

If you are trading in call options, it is important to understand these three moneyness conditions as they determine how quickly your position can become profitable or expire worthless.

What is a Put Option?

Put Option is a derivative contract that gives the buyer the right to sell a stock or asset at a specified strike price by a specified expiry date. Whether to exercise this right or not is entirely up to the buyer. Buying a Put Option is beneficial when the price of a stock or asset price is expected to fall. If the market price goes below the strike price, the option becomes “In the Money” and the buyer starts getting profit. Put Options are often used to hedge existing portfolios or make speculative profits from a falling market.

Example: If Nifty is trading at 25,000 and you have bought a Put Option of strike price 25,500, then this option will be ITM because you have the right to sell at a higher price than the market.

What are ITM, ATM and OTM in Put Option?

The value of Put Options depends on where its strike price stands in comparison to the current market price (spot price). To understand this, we use three terms – In the Money (ITM), At the Money (ATM), and Out of the Money (OTM).

Below we will understand what these three conditions mean in the context of Put Option and how they affect trading:

In The Money (ITM) – Put Option

A put option is considered In the Money (ITM) when its strike price is higher than the current market price (spot price) of the underlying stock. In this case, the option has intrinsic value because exercising it immediately would allow the seller to sell the stock at a price above its current market value, resulting in a profit.

Example: Suppose a stock is trading at ₹1,900 and you have a Put Option of strike price 2,000 – then it will be ITM.

At The Money (ATM) – Put Option

When the strike price and the current market price are almost equal, the option is said to be At the Money (ATM). In this case, the option has no intrinsic value, only time value.

Example : The stock is at ₹1,900 and you bought a Put Option for ₹1,900 then it is called ATM.

Out of The Money (OTM) – Put Option

When the strike price is lower than the current price of the stock, the Put Option is said to be Out of the Money (OTM). OTM puts have no intrinsic value. However, OTM puts can still have time value, which reflects the potential for the stock price to drop below the strike price before expiration, giving the option a chance to become profitable.

Example : Stock is trading at ₹1,900 and you have a Put Option at ₹1,800 then it is OTM.

Understanding the moneyness of Put Options is important because it determines how much profit you can make in a falling market and with how much risk. Knowing the difference between ITM, ATM, OTM is very important for smart trading decisions.

Difference Between ITM, ATM and OTM Options

Criteria	In the Money (ITM)	At the Money (ATM)	Out of the Money (OTM)
Meaning	Call: Strike Price < Spot Price Put: Strike Price > Spot Price	The strike price is nearly equal to the current market price.	Call: Strike Price > Spot Price Put: Strike Price < Spot Price
Intrinsic Value	Present	Exists to a minimal extent (effectively zero).	Absent
Option Premium	Highest (intrinsic + time value).	Moderate (primarily time value).	Lowest (only time value).
Time Decay Impact	Less impact (mostly intrinsic value)	Highest impact (purely time value)	Rapid decay if stock price doesn’t move in favourable direction
Use Case	Conservative trading approach	To profit from quick moves	Speculative bets, breakout trades

Common Mistakes Traders Make in Understanding ITM, ATM, and OTM

Some of the common mistakes traders should avoid while trading ITM, OTM and ATM options are listed below:

Underestimating risks of OTM options as they are cheaper : Many new traders buy OTM options because of their lower premium. But they forget that lower prices does not always mean higher profits. OTM options do not have intrinsic value, and if the price does not move till expiry, the entire premium can become zero.
Ignoring Theta Decay : ATM and OTM options lose value the fastest because their entire premium is based on time value. Especially near expiry, their value decreases rapidly – what we call theta decay. Without favorable price movement, these options can quickly become worthless.
Not understanding Risks while selling ITM options : Many traders sell ITM options without knowing that if the option is ITM near expiry, they may have to deliver the underlying asset (physical settlement).
Not tracking the Spot Price : To correctly understand the moneyness of the option (ITM/ATM/OTM), it is important to look at the real-time spot price. Many times traders make decisions based on the future price, which can lead to wrong strike selection and result in losses.

Conclusion

ITM, ATM and OTM options are not just technical terms, they are the foundation of option trading. Whether you buy or sell a Call or a Put, understanding the moneyness can be the difference between profits and losses. In options trading, predicting the correct direction is only half the battle. Choosing the right strike price is equally crucial. It is essential to choose between ITM, OTM, and ATM options based on the risk-reward ratio of your trading strategy and your overall risk management approach. It is advised to consult a financial advisor before trading options.

Frequently Asked Questions (FAQs)

What is the full form of ITM, ATM and OTM?
ITM: In The Money, ATM: At The Money, OTM: Out of The Money.
How to know if an option is ITM, ATM or OTM?
Check the strike price and market price to determine whether an option is ITM, OTM or ATM.
Which option is safer to buy?
No particular option can be considered the safest to buy, as its value can change significantly with market movements, time decay, and volatility. The choice depends on your trading objective, risk tolerance, and market outlook.
Why is ATM option premium higher than OTM options?
ATM option premiums are higher than OTM options because ATM options have the highest time value. At the money, the probability of the option expiring in the money is greater than for OTM options, making them more valuable to traders.
Can OTM become ITM before expiry?
Yes, an OTM option can become ITM before expiry if the underlying asset’s price moves favorably beyond the strike price, giving the option intrinsic value.

August 15, 2025

What is SPAN & Exposure Margin?

You have certainly heard of terms like SPAN and exposure margin if you have ever worked in futures and options (F&O) trading. They may appear to be financial jargon at first, but knowing them is essential if you want to trade securely.

In essence, margins are the up-front money you must deposit with your broker in order to enter derivatives trading positions. It is a combination of two factors, exposure margin and SPAN margin, each of which has different roles in trading risk management.

This blog will explain what margin in F&O trading means, how exposure and SPAN margins are determined, and why they are important for all traders to understand.

What is the Margin in Trading?

You must pay an initial deposit before you buy or sell contracts when trading futures and options (F&O). This is called margin. Think of it as the minimum balance your broker requires in your trading account to ensure you can cover potential losses and avoid defaulting on your trades.

You can take on positions that are bigger than your available capital would normally allow because of margin, which acts as a financial buffer. Rather than paying the entire contract value when you enter a trade, you only pay a percentage, called the initial margin. For instance, all you need to open a position on a ₹900k equity futures contract with a 15% margin requirement is ₹135k.

This total margin is generally made up of two parts:

1. SPAN Margin

2. Exposure Margin

What is SPAN Margin?

In 1988, the Chicago Mercantile Exchange (CME) created the risk-based margining system known as SPAN or Standard Portfolio Analysis of Risk. SPAN margin simulates a number of outcomes, including price and volatility changes, to calculate the worst-case loss your portfolio could sustain. It allows for offsets between correlated trades by calculating margins for your entire portfolio rather than just for individual positions.

Since SPAN uses scenario analysis instead of a fixed-percentage margin, the amount of margin needed differs according to the time for expiry, portfolio composition, and volatility. If positions offset one another, SPAN can reduce capital requirements by evaluating a full basket of positions at once.

What is Exposure Margin?

The exposure margin is an extra safety net on top of the SPAN margin. It is collected to protect against any sudden changes in the market that the SPAN system might not have taken into account.

You could say that, a “safety net” that brokers or exchanges need in case something goes wrong. This is fixed as a percentage of the total contract value and changes based on the asset and the rules of the exchange.

For Example

Let us say you want to buy Nifty Futures.

SPAN Margin – ₹1,50,000

Exposure Margin – ₹40,000

Total margin needed = SPAN Margin + Exposure Margin = ₹1,90,000

To take the position, you need to have this much money in your account.

Read Also: What is Stock Margin?

Difference Between SPAN Margin & Exposure Margin

Basis	SPAN Margin	Exposure Margin
Assessment Basis	Scenario-based, portfolio-wide risk calculations	Fixed percentage buffer on trade value
Flexibility	Varies with volatility; best for F&O trades	Static cushion in addition to SPAN
Usage	F&O segments using SPAN model	All leveraged positions, across trades
Offset Benefits	Allows netting across long/short in a basket	No offsetting, each trade stands alone

Why is Margin & SPAN Important for Traders?

Understanding how margin and SPAN margin work is not only beneficial but also necessary if you trade futures and options or use any form of leverage.

1. They Help You Manage Risk

The purpose of margin, particularly SPAN, is to ensure that you have adequate money in your account to deal with unforeseen market fluctuations. If things go wrong, it acts as a safety net to shield you and your broker from suffering significant losses.

2. Efficient Use of Capital

Leverage allows you to make larger trades without having to pay the entire amount up front, which is one of the best things about margin. By examining your complete portfolio, SPAN goes one step further. You might require less margin if certain trades (such as a call and a put) balance each other out. This means greater adaptability and more economical use of your funds.

3. Adhering to SEBI Regulations

You have undoubtedly heard of SEBI’s margin regulations if you trade in India. Before you enter a trade, brokers must gather exposure margins and SPAN. If you do not meet expectations, you may be penalised or, worse, have your positions automatically closed. You can prevent surprises and maintain control by being aware of this.

4. Maintaining Flexibility in Real Time

Markets are dynamic. The SPAN margin is recalculated every day, sometimes even within a single day. You can make timely adjustments to your positions, lower your exposure, or add money if you are aware of these changes.

Conclusion

Futures and options trading offer huge possibilities, but they also carry a lot of responsibility. Knowing how exposure margin and SPAN margin operate can significantly impact how safely and effectively you trade. Both are equally significant. You can prevent unnecessary surprises like margin calls and auto square-offs when you understand how much margin you need and why.

Therefore, always check your margin needs before making a trade, put aside a small amount as a buffer, and adjust your strategy accordingly. You’re already playing the game better than most when you know the rules.

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1	Margin Pledge: Meaning, Risks, And Benefits
2	What is Intraday Margin Trading?
3	Top Tips for Successful Margin Trading in India
4	What is Margin Funding?
5	Difference between Margin Trading and Leverage Trading
6	Margin Against Shares: How Does it Work?
7	What is Operating Profit Margin?

Frequently Asked Questions (FAQs)

For what reason do I require both margins?
The SPAN margin covers the expected risk. It is based on different market scenarios and is meant to protect against likely price changes. On the other hand, exposure margin protects against unexpected risks.
Do these margins fluctuate daily?
SPAN margin can change when market volatility increases. Unless regulations change, the exposure margin usually remains constant.
Who determines the amount of margin I require?
Your broker complies with the regulations set forth by the exchange (such as the NSE). Additionally, SEBI closely monitors to ensure that everything is secure and fair.
What happens if my account doesn’t have enough margin?
You may receive a margin call from your broker requesting additional funds. They may automatically end your position if you don’t.
Is it possible to lower the SPAN margin that I must pay?
Indeed! Both your overall risk and your SPAN requirement decrease when you make hedged trades, such as combining a call and a put.

August 13, 2025

Use Cases of AI in the Stock Market

AI has transformed the world in every possible manner and is almost used in every industry, and the stock market is no exception. AI has transformed the stock market’s operations, from executing trades with precision to forecasting stock price movements using historical data and real-time news.

In this blog, we will give you an overview of use cases of AI in the stock market, along with its key benefits and risks.

AI in Action: Transforming the Stock Market

In the world of the stock market, artificial intelligence (AI) refers to the application of complex algorithms and machine learning models to analyze market data, identify patterns, and decide whether to trade or invest. It involves the automation of processes like analyzing sentiment, risk assessment, price prediction, and portfolio management that used to need human intelligence.

Over time, AI has become an essential tool for traders and investors, enabling faster and more accurate decisions than traditional methods. By processing vast amounts of data in real time, it can detect subtle market trends that might be invisible to the human eye. AI-powered systems can also adapt to changing market conditions, continuously learning and improving their performance. This capability helps reduce emotional bias in trading, allowing for a more disciplined and data-driven approach to investing.

Features of AI in the Stock Market

The key features of AI in the stock market are as follows:

Analyse Large Datasets: Massive volumes of structured data, like historical prices, trading volumes, financial statements, etc., can be used, processed, and analysed by AI at a speed and scale which is not possible for humans.
Automated Trades: AI makes it possible for buy and sell orders to be executed automatically based on set rules or strategies.
Sentiment Analysis: AI analyses public sentiment from reports, social media, and news using Natural Language Processing (NLP), and provides its impact on price.

Use cases of AI in the Stock Market

The most significant and impactful applications of AI in the stock market include:

Prediction of Market Movement: To forecast future stock movements, artificial intelligence (AI) systems examine huge amounts of past price data, volume patterns, and technical indicators.
High-Frequency Trading: AI-powered high-frequency trading systems can process millions of transactions per second, capitalizing on microsecond price discrepancies across global markets.
Sentiment Analysis: To assess market sentiment, tools that use AI look for information from news articles, earnings reports, and social media platforms.
Management of Portfolio: Investment portfolios are created and rebalanced by AI-driven robo-advisors according to the risk appetite, investment horizon, and goals of each investor.
Detection of Fraud: Artificial intelligence (AI) algorithms help in the detection of insider trading patterns, market manipulation, and unusual trading activity.
Customer Service: AI-powered chatbots are used by brokers to improve customer engagement and operational efficiency by responding to investor inquiries, recommending stocks, and facilitating trade execution.
Preparing Strategies: By leveraging historical data, AI can develop and test trading strategies to assess potential risks and profitability before they are executed in real markets.

Benefits of Using AI in the Stock Market

The significant benefits of using AI in the stock market are as follows:

Decision Making: AI helps an individual in analysing large amounts of data collected from multiple sources in less time and make an informed decision.
Faster Execution of Trade: Through AI algorithms, one can execute trades within microseconds, as this can give traders an additional benefit while executing a trade.
Zero Emotions: Since AI operates without emotional influence, it minimizes the impact of feelings like fear or greed, making decisions solely based on data and logic.
Round-the-Clock Monitoring: AI trading systems can work 24/7 and continuously scan the market for trading opportunities.
Risk Management: AI models help minimize potential losses by continuously monitoring market conditions and adjusting risk levels in response to stock price movements.

Read More: Benefits of AI in the Stock Market

Risk of Using AI in the Stock Market

There is a certain risk of using AI in the stock market; a few of such risks are mentioned below:

Limitations in Real Markets: Since AI relies heavily on backtested data, its strategies may not always perform well in real-world scenarios, where market sentiments are often influenced by human emotions.
Transparency: AI models generate solutions based on complex calculations, but often offer limited explanation of their reasoning, resulting in a lack of clarity.
Error: If any coding error occurs in creating AI driven systems, it can lead to significant losses in automated trading.
False Information: AI is not smart enough to analyse which news is false and which is true; therefore, any false news spread online can lead to wrong trading decisions and cause significant losses.
Cyber Security: Any kind of cyber attack might impact the AI system, as cyber attackers can control the bot and intervene in the automated trading system.

Read Also: Can AI Predict the Stock Market?

Conclusion

On a concluding note, AI has brought a revolutionary shift to the stock market in recent years. It is now widely used for risk management, robo-advisory services, and many other applications, enabling the analysis of vast amounts of data within seconds. However, using AI also comes with significant risks, such as cybersecurity concerns, decisions based on false information, etc. Therefore, it is advisable to use AI in the stock market analysis only after consulting your investment advisor.

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1	How to Use AI for Smarter Investing in India
2	Scope of AI in Investing: Usage, Benefits, and Challenges
3	What is AI Washing? Definition, Tips, Evolutions & Impact
4	How to Use AI for Stock Trading?
5	Stock Market Prediction Using Machine Learning
6	Best AI-Based Trading Strategies Explained
7	Risks of Artificial Intelligence Trading
8	Best Artificial Intelligence (AI) Stocks In India
9	Scope of AI in Investing: Usage, Benefits, and Challenges

Frequently Asked Questions (FAQs)

Can a retail investor use AI tools?
Yes, there are many platforms that provide AI tools for retail investors, allowing them to get the benefit of robo-advisory, stock screening, execution of trades, etc.
What are the risks involved in using AI tools in the stock market?
The significant risk involved in using an AI tool in the stock market is the lack of transparency, cyber threats, false information, etc.
Is it legal to use AI in the Indian stock market?
Yes, use of AI tools in Indian stock markets is legal, but institutions must comply with SEBI guidelines on algorithmic trading, risk management, and model governance.
How does AI predict the stock price movement?
AI predicts the stock price movement based on historical data, news, technical indicators, and financial reports.
Can AI analyse news related to a particular stock?
Yes, AI can analyse news related to a particular stock as it uses the Natural Language Processing (NLP) algorithms that reads the news, posts and discussion related to a particular stock for making trading decisions.

August 12, 2025

10 Best Chart Pattern Books for Traders

If you want to be successful in trading, reading chart pattern books is as important today as it was in the past. In 2025, where the market has become even faster, volatile and technology-driven, identifying the right chart pattern can greatly improve your trading decisions. Whether you are a beginner or an experienced trader, the best chart pattern book can enhance your technical analysis skills.

In this blog, we will tell you about 10 such excellent and updated best trading chart patterns books which are still relevant and can help you realize consistent profits.

Top 10 Best Chart Patterns Books for Traders (2025 List)

Book Name	Author	Best For	Key Highlights
Encyclopedia of Chart Patterns	Thomas N. Bulkowski	Intermediate Advanced traders	Includes approximately 70–75 reversal and continuation patterns, statistical data, and failure analysis
Technical Analysis Using Multiple Timeframes	Brian Shannon	Intermediate Advanced traders	Accurate identification of chart patterns in a multi‑timeframe context, trend alignment
Trading Classic Chart Patterns	Thomas N. Bulkowski	Intermediate traders	Entry/exit levels, trade setups, real examples for each pattern
Japanese Candlestick Charting Techniques	Steve Nison	Beginners Intermediate	Candlestick foundations for pattern analysis
Trading Price Action Trends	Al Brooks	Advanced traders	Deep understanding of repeated estimation methods, trend-following and reversal patterns
Price Action Breakdown	Laurentiu Damir	Beginners Intermediate	Focus on high-probability patterns such as pin bars, inside bars, engulfing bars
Trading Price Action Reversals	Al Brooks	Advanced	Reversal patterns, entry setups, trade structure analysis
The Visual Guide to Chart Patterns	Thomas N. Bulkowski	Intermediate	Visual aids and structure-based examples for pattern recognition.
Candlestick Charting Explained	Gregory L. Morris	All Levels	Focus on standardized 89 candlestick patterns, with an emphasis on pattern identification and false signal filtering
Chart Patterns	Bruce M. Kamich	BeginnersIntermediate	Formations like flags, head‑and‑shoulders, double bottoms, breakout timing and pattern spotting guide

Brief Overview of the Chart Patterns Books

A summary of the 10 best Chart Patterns Books has been given below:

1. Encyclopedia of Chart Patterns

This book is considered to be a definitive reference in the world of chart patterns. Thomas Bulkowski has explained more than 60 classic chart patterns such as head & shoulders, triangles, flags etc. with statistical analysis. The success rate, failure rate, average price movement and trading strategies of each pattern have been explained in detail. This book is very useful for traders for pattern-based decision making and price prediction. The special thing is that the author has also analysed the performance of each pattern on the basis of historical market data.

2. Technical Analysis Using Multiple Timeframes

This book by Brian Shannon is excellent in explaining the concept of multiple timeframes. Although it covers broader technical analysis, the depth of price structure and chart interpretation in it is very high. The author explains how the same chart can be analysed in different timeframes to decide better entries and exits. It provides practical ways to integrate trend alignment, support-resistance zones and moving averages with price action, making trading decisions more confident.

3. Trading Classic Chart Patterns

This is Bulkowski’s second important book that focuses specifically on classical chart patterns. It takes a deep dive into about 50 traditional patterns such as cup & handle, double top, triple bottom, etc. The psychology behind each pattern, entry-exit rules and performance statistics are provided. Also, real-world examples and visual charts make it very practical. This book is for those traders who want to make pattern recognition their core trading tool.

4. Japanese Candlestick Charting Techniques

This classic book by Steve Nison gives Western traders detailed knowledge of candlestick charting for the first time. It explains more than 50 candlestick patterns such as doji, hammer, engulfing, morning star. The meaning, formation, market psychology and trading signals of each pattern are given in a very systematic manner. This book is a reference guide not only for beginners but also for advanced chartists. The integration of candlestick and bar charts is also explained well in it.

5. Trading Price Action Trends

This book by AL Brooks gives scientific depth to price action trading. In this, chart analysis is done only on the basis of price bars, without any indicators. The author has done a detailed study of trend structures, breakout patterns, pullbacks, and exhaustion points. The special thing is that this book is based on intraday charts and improves chart-based decision making in scalping or short-term trading. This book is like a guide to understand the internal dynamics of price movement.

6. Price Action Breakdown

This book focuses on price action in a simple and structured way. It teaches ways to identify basic chart structures such as support-resistance, swing highs-lows, and trendlines. The author emphasizes on explaining the psychological patterns of the charts, which helps in better prediction of reversal and continuation points. This book is useful for those traders who want to trade by understanding the price structure without indicators.

7. Trading Price Action Reversals

This book by Al Brooks provides a microscopic analysis of reversal patterns. It explains how a trend reversal can be identified in advance from the price action. Patterns like false breakouts, double tops-bottoms, wedge reversals are explained on real charts. This book is highly recommended especially for intraday and short-term traders who work on reversal-based entries. Logical approach and context-based analysis are its core strengths.

8. The Visual Guide to Chart Patterns

This book is the best option for a visual learner. In this, every chart pattern has been explained in a graphical manner, which makes recognition easy. Bulkowski presents dozens of chart patterns’ structure, breakout direction, failure signs, and performance stats through visuals. This is a user-friendly and practical guide for beginners and intermediate traders. An unmatched resource for visually understanding pattern-based decision making.

9. Candlestick Charting Explained

This book by Gregory Morris explains the concepts of candlestick charting in detail and step-by-step. Over 50 individual candlestick patterns and their combinations are thoroughly analyzed. The formation, significance, and reliability of each pattern are statistically validated. The book also contains numerous charts and historical examples, so that theoretical concepts can be easily applied practically. This book is highly useful for mastering candlestick techniques.

10. Chart Patterns

This book explains the identification, reliability, and application strategies of reversal and continuation patterns through case studies and charts. Kamich focuses on the institutional level charting approach, making it a solid resource for advanced traders. Matching fundamental concepts to charts improves the ability to perform real-time trading analysis.

What Makes a Great Chart Pattern Book?

Several key qualities distinguish an excellent chart pattern book as listed below, ensuring it is both informative and practical for traders at any level.

Clear explanation with practical charts : The best chart pattern book is considered to be the one that explains the pattern step-by-step through real charts. Visual clarity is more important than text.
Data and backtesting based analysis : Just identifying the pattern is not enough. A good chart patterns book must have data like historical performance, success/failure ratio. This gives you both confidence and direction in trading.
Easy and understandable illustrations : Good books explain even complex things with simple illustrations, so that even beginner traders can learn easily.
Information about false breakouts and failed patterns : A book that explains not only successful patterns, but also failed patterns and their signals is more reliable.
Matches your trading style : Every trader has a different style day trading, swing or positional. The right book is the one that gives you depth and context according to your need.

How to Choose the Right Chart Patterns Book for You

Every trader has different needs, so it is important to understand your skill level and trading style before choosing a chart pattern book. Below are some important points that will help you choose the right book:

Focus on visuals if you are a beginner : If you are a beginner, choose a book that has charts, examples and easy illustrations. This will help you quickly identify and understand patterns.
Data is important at the intermediate level : If you have some experience, then books that include success/failure rates of patterns, historical analysis and trading strategies will be better.
Advanced traders require in-depth knowledge : If you trade at the pro level, read books that cover topics such as context-based patterns, trading psychology and risk management.
Match your trading style : Whether it is day trading or swing trading, the book should match your strategy.

Conclusion

Understanding chart patterns in trading helps you make better decisions but it starts with a good book. Not every book is right for everyone, but when you choose according to your needs and experience, that book becomes the strongest source of learning. Any of the best chart pattern books mentioned above can point you in the right direction. Start, build understanding slowly and start applying it on real charts that is the real growth.

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1	10 Best Price Action Trading Books
2	Top 10 Option Trading Books in India
3	Top 10 Books for Beginners in Trading & Investing
4	5 Must-Read Best Swing Trading Books for Trader
6	10 Best Algorithmic Trading Books
7	10 Best Personal Finance Books to Read

Frequently Asked Questions (FAQs)

Which is the best chart pattern book for beginners?
Japanese Candlestick Charting Techniques is considered to be an excellent book for beginners.
Are chart pattern books still useful in 2025?
Yes, they are equally useful even today, especially for learning technical analysis.
Can I learn chart patterns without any trading background?
Even without a trading background, anyone can learn chart patterns by starting with the basics.
How long does it take to learn chart patterns?
If you practice daily, you can develop a good understanding in 1-2 months.
Do these books include real chart examples?
Yes, most books contain real charts and case studies.

August 11, 2025

Category: Trading

What Is Black-Scholes Model?

1. Current Price

2. Strike Price

3. Time to Expiry

4. Volatility

5. Risk-Free Interest Rate

The Black-Scholes Formula

Black-Scholes Formula:

Variables and their meaning (applicable to both Call and Put):

Example: Call Option Price Using Black-Scholes

Benefits of the Black-Scholes Model

Strengths and Limitations of the Black-Scholes Model

Strengths

Limitations

Conclusion

Frequently Asked Questions (FAQs)

What is the Black-Scholes Model used for?

Is the Black-Scholes Model still relevant today?

Can I use the Black-Scholes formula to calculate option prices manually?

What are the key inputs in Black-Scholes Model?

Is the model accurate in all market conditions?

What is a Margin Trading Facility (MTF)?

Pros of Margin Trading Facility

Cons of MTF

What is Pledging of Shares?

How does Pledging of Shares work?

Pledging of Shares Process: OTP facility from CDSL/NSDL

Which stocks can be pledged?

Pros of Pledging of Shares

Cons of Pledging of Shares

Pledging of Shares vs Pay Later (MTF): Key Differences

Increase Buying Power with Pocketful MTF – Get 5x Margin!

When Should You Use Pledging of Shares?

When Should You Use Pay Later (MTF)?

Conclusion

Frequently Asked Questions (FAQs)

What is the meaning of MTF in trading?

Can I pledge any stock for margin?

Is interest charged in MTF?

What happens if the price of the stock bought using MTF falls?

Which is safer: MTF or Pledge Shares?

What is Spot Trading?

How Do You Actually Make Money?

Advantages of Spot Trading

Disadvantages of Spot Trading

How to Start Spot Trading : First Steps

Step 1

Step 2

Step 3

Step 4

Step 5

Factors to consider before starting spot trading

Conclusion

Frequently Asked Questions (FAQs)

Is spot trading suitable for beginners?

What is the minimum amount to start spot trading in India?

Can I lose more money invested in spot trading?

Can I lose more money invested in spot trading?

What is the difference between spot trading and investing?

Do I need to keep an eye on the market all day for spot trading?

What is a Margin Trading Facility (MTF)?

How does Margin Trading Facility (MTF) work?

How to Avail Pay Later Facility?

Step 1: Open a trading account with a broker that offers MTF or Pay Later Facility

Step 2: Activate MTF facility

Step 3: Fund your margin account

Step 4: Select from MTF-approved stocks

Step 5: Place an order by choosing “Margin” or “Pay Later” option

Step 6: Keep regular track of positions and interest

Key Benefits of Using MTF

Risks & Charges Involved

Factors to Consider Before Using MTF

Conclusion

Frequently Asked Questions (FAQs)

What is margin trading in simple terms?

Is there any interest charged on MTF?

What are the steps for a margin trading facility (MTF)?

Is margin trading safe for beginners?

Can I hold MTF stocks for the long term?